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Interview with Erik Jonnaert, Secretary General of the European Automobile Manufacturers’ Association (ACEA)

Published on 23 September 2016 by Maria Danilova

ABOUT Erik Jonnaert

Erik Jonnaert is Secretary General of the European Automobile Manufacturers’ Association (ACEA). Mr Jonnaert began his career with the Linklaters law firm. He subsequently joined Procter & Gamble, where he worked for 25 years in public and regulatory affairs, communications and stakeholder relations. Before joining ACEA, he was Procter & Gamble’s Vice President for External Relations in Europe and Asia. Mr Jonnaert is a graduate of Harvard Law School.

Anastasia Varnavskaya, Head of Automotive Portfolio, Adam Smith Conferences: Assisting with the development of a competitive automotive industry is one of the cornerstones of your organisation. What does it mean to be competitive in 2016? Has it changed over the last decade?

Erik Jonnaert, Secretary General of the European Automobile Manufacturers’ Association (ACEA): Indeed, one of ACEA’s main objectives is to strengthen the global competitiveness of the European automobile sector. We do this by engaging in dialogue with the European institutions and other stakeholders in order to improve understanding of industry-related issues, and to contribute constructively to effective policy and legislation. More than ever it is crucial for us to work together with these players, because we need an enabling policy framework if we are serious about stimulating growth and jobs in Europe.

One of the key paths towards strengthening our competitiveness is fostering innovation. Bearing in mind that innovation is market driven, the automotive industry needs the flexibility to drive it forward, with policies and regulations that encourage it. Policy makers are often in a unique position to support dedicated automotive initiatives and research that can further advance vehicle connectivity, environmental performance and safety.

Secondly, we need to ensure that regulatory requirements remain balanced and proportional if we want to retain our industry’s competitiveness in decades to come. The automotive industry is already one of the most regulated sectors in Europe, subject to around 80 EU Directives and over 70 international UNECE agreements. Regulations relating to safety, the environment and taxation have already added significantly to the manufacturing cost of a car.

Future regulatory measures should be more effective and balanced, whilst safeguarding industry competitiveness. For example, in the case of decarbonisation our industry has already reduced CO2 emissions significantly and is committed to do more, but the relative costs of reducing emissions must be similar and proportionate across all sectors, in Europe versus the rest of the world. That’s why ACEA calls for a holistic approach, addressing all modes of transport – including air, maritime and rail – and all of Europe’s industrial sectors. For more information about reducing CO2 emissions more effectively, I recommend everyone to visit: www.reducingCO2together.eu.

Anastasia Varnavskaya: When do you think the EU car market will reach pre-crisis levels again?

Erik Jonnaert: Although the EU car market continued its path of recovery last year, when around 13.7 million cars were sold, it is important to understand that we are still far below the pre-crisis level of 15.5 million units. At the moment, ACEA forecasts growth for EU passenger car sales in the region of 5% for 2016. In terms of units, this would mean over 14 million cars sold. Quite a feat, but still far removed from peak sales in 2007. The same goes for production. Although the number of both passenger cars and commercial vehicles produced in Europe increased by more than 7% last year, we’re still not able to come close to pre-crisis levels. The situation in Europe is still very different from what we have seen in the United States over the past few years, where the auto industry has managed to fully recover from the crisis.

One thing that could turn the tide is TTIP. This trade agreement between the United States and the EU is currently under negotiation, and would offer great market opportunities for Europe’s automobile manufacturers. Hence, we need policy makers to safeguard the positive, yet fragile, momentum of our industry by continuing to stand by the principles of free trade. Not only would TTIP give our industry a boost, but the trade agreement also presents an unprecedented opportunity for Europe’s economy at large – stimulating EU manufacturing and trade.

Anastasia Varnavskaya: At our CEE Automotive conference a couple of years ago, one of the speakers voiced the opinion that there is no business case for OEMs to have full-scale electric vehicles production. Do you agree?

Erik Jonnaert: While market acceptance of alternative-fuel vehicles is rising, they still only represent a very small share of vehicle sales in Europe. Last year, more than half a million alternative fuel vehicles were registered in the EU. That’s up 20% compared to 2014, but fact remains that 99 percent of customers in Europe did not chose an all-electric vehicle last year.

At the same time, we see that manufacturers have already invested heavily in electric powertrains. Most of them now have several types of electric vehicles in their portfolio, and will continue to make major investments. So some would argue that electric vehicles are a business without a business case. However, we still believe that electric vehicles, as well as a range of other alternative powertrains, have the potential to make a crucial contribution to the further decarbonisation of road transport.

I’m confident that alternative powertrains will see greater market uptake in the future. But to do so quickly, industry and policy makers need to work closer together to foster costumer demand. That means that governments across Europe will need to increase their support, both in terms of helping to build the necessary charging infrastructure and in influencing consumer choices, for example by harmonising customer incentives across the EU. If we can overcome these challenges, consumer acceptance of electric vehicles could really accelerate.

Anastasia Varnavskaya: What do you consider to be the main goals and challenges for your association over the next 3-5 years?

Erik Jonnaert: Well, 2016 marks the 25th anniversary of ACEA. So this year actually serves as a moment of reflection for us. Together with our members, we have used this moment to outline some of the key challenges that industry and policy makers must overcome to deliver cleaner, safer and smarter mobility in the future.

After all, we are already facing plenty of environmental and societal challenges, and demand for passenger and freight transport will only continue to grow in decades to come. That’s why Europe’s automobile manufactures, already today, are actively investing to meet tomorrow’s mobility needs. Besides developing state-of-the-art vehicles that are fuel-efficient and low-emitting, manufacturers are also looking into completely new concepts, such as on-demand mobility.

This positive outlook on innovation, as well as the challenges faced by our industry, have now been summarised in ACEA’s Manifesto for Clean, Safe and Smart Mobility, which you can explore at: http://www.acea.be/publications/article/manifesto-for-clean-safe-and-smart-mobility. Besides providing a glimpse of what tomorrow will bring, this richly-illustrated Manifesto also presents an overview of what progress has been made to date.

Anastasia Varnavskaya: Sharing economy and carsharing in particular – do you see it as a threat to the industry?

Erik Jonnaert: Personally I believe that new models of mobility, including carsharing, are part of a wider move towards more effective and integrated transport systems that can respond to the need for increased mobility of businesses and citizens. Of course, such disruptive developments might challenge traditional automotive business models to a certain degree, but at the same time they also present great opportunities.

Already now, Europe’s automobile manufacturers are developing very innovative mobility models. Many of them are seeking to complement their traditional business model of selling vehicles by a range of diverse, on-demand mobility solutions. Think of customised intermodal mobility solutions, innovative logistics concepts and new models of ownership that fit the sharing economy. Quite a few of ACEA’s members already operate carsharing schemes throughout Europe and the world. Especially in urban areas, the offer of mobility services is growing quickly. In my view, auto manufacturers are clearly evolving into providers of innovative mobility solutions, rather than ‘just’ being producers of vehicles. So rather than a threat, manufacturers see these changes in demand for mobility as an opportunity.

Anastasia Varnavskaya: ACEA is a major contributor in shaping industry regulations and trade deals. What is the EU’s automotive export potential? Are there any new opportunities to look forward to?

Erik Jonnaert: Last year the EU automobile industry exported more than 6.2 million vehicles, generating a positive trade balance in excess of €100 billion for Europe. The United States is by far the biggest market for European motor vehicles, accounting for more than 20% of exports. Given the role of the United States as Europe’s most important trade partner, the automobile industry strongly supports the ongoing negotiations for an EU-US trade agreement, known as TTIP.

On both sides of the Atlantic, manufacturers agree that the elimination of tariffs and of non-tariff barriers through regulatory convergence will enable the automobile sector to lower costs and improve efficiency, while upholding high safety and environmental standards. A recent study concluded that the elimination of such differences could increase automotive trade by 20% or more, resulting in transatlantic income gains of over $20 billion.

However, regulatory convergence in the automotive sector will not only be of benefit to the industry: consumers are also set to gain from TTIP. They will benefit from increased savings and better product choice, as automakers can offer more vehicles at lower prices.”

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